Finance and Tax Blog for individuals and companies

A new Double Taxation Agreement was signed between the UK and China on 27 June 2011. The DTA will come into force when both countries have completed their respective legislative procedures and will take effect from the following year. The DTA generally follows the OECD Model Double Taxation Convention and has a modern exchange of information article.

The Agreement includes a reduction on the rate of withholding tax on dividends from 10% to 5% for direct investors if the beneficial owner is a company which holds directly or indirectly at least 25 per cent of the capital of the company paying the dividends. Otherwise a rate of 10% withholding tax will apply to portfolio investors.

However, in the case of UK Real Estate Investment Trusts and Property Authorised Investment Funds the rate of withholding tax on UK distributions will be reduced to 15%. More detail will be provided when the DTA comes into force.